BellSouth posts higher profits, sales

WASHINGTON (CBS.MW) -- BellSouth posted higher profit in the third quarter, as the company reduced expenses and saw a small gain in revenue, the company said Wednesday. Stronger sales of high-speed Internet and long-distance service also helped.

In the latest quarter, BellSouth said it earned $936 million, or 51 cents a share, up from $640 million, or 34 cents, a year ago. See news release.

Adjusted for one-time items, the local phone giant recorded income of $980 million, or 53 cents a share, compared with year-ago profit of $958 million, or 51 cents. That beat the 50-cent consensus of analysts surveyed by Thomson First Call.

With wireless sales factored in, the company posted sales of $7.3 billion, up 2 percent from a year earlier.

During the quarter, BellSouth cut operating expenses in its non-wireless businesses to $4.2 billion from $4.4 billion a year earlier. Expenses rose 2.6 percent to $5.5 billion with Cingular.

Cingular added a net 745,000 wireless subscribers, its biggest gain in 10 quarters. The company ended the period with 23.4 million subscribers.

BellSouth's portion of wireless revenue jumped 4.7 percent to $1.6 billion, but its share of operating profit fell to $195 million from $246 million.

The company's mainstay wireline business, meanwhile, increased revenue by 1.1 percent to $4.7 billion and its profit margin rose to 26.6 percent from 25.3 percent. BellSouth cited improved success in retaining or winning back customers, along with strong sales of DSL and long distance.

The company continued to lose local phone lines, however. It ended the quarter with 23.9 million lines in service, a decline of 4 percent from the year-ago quarter. Yet BellSouth said it lost the fewest number of lines to rivals since the fourth quarter of 2001.

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